Motivated Seller, How do I make this deal happen?

Question

I have a potential Deal.   Couple gets married, it doesn't work out.  Husband owns house and mortgage is in his name.  He leaves, and the agreement is his wife is to pay the mortgage.  Almost two years later he finds out wife hasn't been paying and foreclosure is pending.  There are not many comps.  It is a small little neighborhood.  One comp sold for 97K recently and another listed for 82K for about 4 months ago.  This house is nicer than the one on the market for 82K.

Seller wants no money.  He wants to return the loan current and give the place to us subject two.

Here is where I am stuck.  The amount to bring the loan current is about 15K.  After it is brought current the loan Balance is 65K.

This neighborhood will most likely not bring in a person with more than 5K down, and a investor would not pay much more than 60K.  But more if we could leave the financing in place and there is just down payment involved. (would do his with the knowledge of seller)

The rents are HIGHER then the mortgage PITI payment by almost $300.

1)  I have authorization from the seller to talk to the bank.  Is there any way to negotiate the loan with the bank to bring it current for less?

2) How does an investor with authorization talk with the bank? What does that conversation look like?

3)  Any Other ideas on deal Structure?

Stephen Chatto · Answer

Spoke with the lawyer,   Because there are still married I need to have her sign the agreement for sale also, even though she is not on title.  I don't see her doing anything other then letting this deal go completely to foreclosure.  I will still talk to the bank mostly for the experience and to see if it is worth getting into a conversation with her.

Christopher P. · Answer

OR maybe he could just pass it on to an experienced investor for a finder's fee.

Stephen Chatto · Answer

Bill G. Trust me I am not losing sleep over it.  I am actually really good at sleeping!

I am excited to see how the conversation with the bank goes.   If I can help this guy I will.  That's why I am in this business is to help people.  After talking to the bank I will know if I can help him.  If I can't I will try to refer him to someone who can.

Bill Gulley · Answer

Stephen, It's early, I can tell you this is not a deal to lose sleep over! LOL

Your first hill to climb is with the bank. Your best approach on this is to buy the note, if the borrower works with you and requests the lender sell the note as a payoff, that's the best way to go.

Then the borrower gives you the deed instead of foreclosure.

At 15k, it sounds like they packed in attorney fees for foreclosure, maybe not. But it will get harder to pull out as time passes.

You still need to bring the loan current for any lease funny business with higher rents, it could be a lot of liability for a few bucks a month, not sure that's a good way to go here, but could be.

Stephen Chatto · Answer

Thanks everyone or you feedback.   I am going to negotiate with the bank and see If I can reduce the amount to get current, and then see what the numbers look like from there.

Brian Gibbons · Answer

If there is no equity and Sandwich might be an option, if there is a positive cash flow between rent differential, but...

80 for 80?  with back payments?

You might do a cooperative assignment, lease w option and sell the contract for a fee.

There are easier sweeter deals all day long, for cash or for terms.

Best of Luck,

Brian Gibbons

Fred Ramos · Answer

i suppose  some money could be  made on the deal.. That depends  on the seller.

A loan mod  could  be attempted.. If  that's a possibility, get a contract  contingent on the seller  getting a better deal  with the bank. 
 
 If that is a possibility,  lease the property  with the option of  purchase in the future from  the seller...(the longer the lease the  better)

sandwich lease option  it  to a tenant buyer  for $x..   and Keep the property  for cash flow( long term) ..
   
or get out of the sandwich  lease and assign  the option to an investor.. 
 
 Sounds  simple, but it isn't.. there are too many variables to consider..

nevertheless, deals like this could be very sweet,  if you know what you are doing..  Why?  Most investors turn their  backs on them..

R. Kerry Brooks · Answer

Stephen Chatto I agree with the other posters, a motivated seller does not always mean a good deal. Stick to the numbers they are what they are. If they work buy if they don't NEXT. Don't spend a lot of time trying to make the numbers fit what you need. Find the deals that fit the numbers.

Bill Gulley · Answer

I agree, short it or go to the couthouse steps. You might try buying the note at par at 65k. But that's not a deal.

Jon Holdman · Answer

$80K for a house that might be worth $80K and almost certainly needs work.  No deal.  Sorry.  Next!

A short sale might be an option, if the owner and occupant will cooperate.